Conference call transcript 28 August 2014 ANNUAL RESULTS Ed Jardim Good morning and welcome to the Murray & Roberts annual results presentation. My name is Ed Jardim. I’m the group Communications Executive of Murray & Roberts. Welcome to our results presentation. Just before we start, a Stop.Think.Act.24/7 safety moment and some housekeeping. We are not planning an emergency evacuation today, so if you do hear an audible alarm it is a real evacuation. You have two options to evacuate this floor. Out this door to the left there is an emergency evacuation door here. There is a box with a glass in it. Please break the glass. The door will release. Make your way down the stairs to the ground floor, out and around the building and out to the public parking space across from the building where our assembly point will be. The second option is out these doors to the right. We’ve got stairs on either side of the lift. Please make your way down those stairs to the ground floor and out the main entrance where you came in this morning and to the public parking space for the emergency assembly point. From a housekeeping point of view, it is a non-smoking building. We have bathrooms here to the left and also next to the stairs. Arthur from the IAS could not make it on time. He is stuck in traffic. So on behalf of the IAS I would also like to welcome you. Just to go through the programme for today, we are going to have our Chief Executive and the CFO present the results for us. After that we’re going to do a results-specific Q&A. Followed by that, which is new this year, we’re going to do a platform Q&A or operational Q&A. various platform executives join us today. If you would like to stay behind for the platform Q&A we are going to have a Q&A with our operational platform executives as well. I think let’s get started then. Thank you. Henry Laas Morning and welcome to Murray & Roberts. For those of you who had some difficulty in the traffic, apologies for that. It is very nice for us to receive you in our corporate office. It’s a fantastic facility. This 9 th floor is where we present our leadership training in the group, and it is nice to receive you this morning. We will be talking about the results for the year to June 2014. Over the past few years we’ve been communicating a lot with you and sharing information with you about Murray & Roberts’ recovery and growth plan and the implementation of this plan. And I think today we’re closing that book. It is year three. We are talking about the results to June 2014, which is the last year of the recovery and growth phase. We will give you some insight into the new strategic future of Murray & Roberts. We are here today to review our results, so let’s do just that. Attributable earnings are R1.3 billion. Our diluted continuing headline earnings per share closed on 205 cents and a dividend of 50 cents for the year. Cash at R1.8 billion is down on what it was last year, but you will recall we have invested R4.4 billion when we acquired the minority stake in Clough last year. The order book is R41 billion. It is down, but we will explain that in a bit more detail a bit more later. Claims. We’ve managed to settle the GPMOF claim and recorded R323 million additional income. What this really means is that the uncertified revenue amount that we had in our accounts previously has now been certified, and over and above that there was income of R333 million. Unfortunately that did not flow through to the bottom line because we also had to create certain provisions within the group, and we will give more detail on those provisions. 1
Major transactions. We’ve acquired the minority stake in Clough for R4.4 billion, and we have also concluded the disposal process of our construction business. There was a lot of corporate activity in this past year, with Clough and Construction Products being the two main activities. This morning when I look at these results in the newspaper and see how it actually printed I said to myself, well, it is a reasonable set of results. And I hope that you will agree with us. So we are pleased to share these results with you. It is a lot easier to talk to you when we’ve got decent results than it is to face you when the results are not that good. So we are very pleased with the results. If you look back over the past five years what you see on the right-hand side represents 2012, 2013 and 2014. This is the period of the recovery and growth phase in the history of Murray & Roberts. Looking at attributable earnings and diluted continuing HEPS, the yellow represents continuing operations and the grey represents contributions from discontinued operations. Looking forward we expect that you won’t see such a significant contribution from discontinued operations because most of the corporate activity and the disposal process that we embarked on during the recovery and growth phase is now behind us. And what you see there in the line represents the headline earnings per share. And 205 cents for the year under review represents a 67% growth on the previous financial year. Safety in Murray & Roberts has come a long way, as you can see on this graph. It is a very important consideration in all the decisions that we take within Murray & Roberts. Our lost-time injury frequency rate at 0.8 is a record low for Murray & Roberts. It has never been as low at 0.8. Our target for the year was 0.9. We came in below the target. And the target for the new financial year is 0.8. We are very pleased with this result. This is a group result. When you look at the platform results obviously it is different for the various platforms, but in a group context it is 0.8. I can assure you that for each and every platform when you look at their results relative to the industry in which they operate it is a leading performance, and we are very pleased with that. Unfortunately we did have four fatal incidents for the past year. And we worked very hard to prevent that from occurring in the business, but we have four fatal incidents. I am very disappointed about that. Hopefully the new financial year will be a year without any fatal incidents. These results are not just a coincidence. It requires hard work. It requires significantly leadership effort to achieve safe outcomes in a workplace. And we are really committed to our zero harm through effective leadership programme. We are committed to our visible felt leadership initiatives. And we have in the past year in our South African operations implemented the Philisa health and wellness programme for our employees. I want to very briefly summarise the recovery and growth phase of Murray & Roberts’ history, and then I will give you some indication of the new strategic future. In financial year 2012 you will recall from the graph I showed you earlier on we had huge losses in financial year 2011. In financial year 2012 we had to do a lot of work to reorganise and re-energise the organisation. The morale was low considering the difficult financial circumstances under which we operated, so we had to do a lot of work focussing on that. We had to improve the liquidity within Murray & Roberts. At this stage we had a net debt position of R5 billion. We had a net cash position of R1.8 billion. We had to realign Murray & Roberts. The idea behind that was to bring focus into the organisation, which we felt was necessary at that point in time. We had to develop a growth plan for Murray & Roberts. And you will see on the slide at that stage we said we have to come up with a strategy for Clough. Should Clough be part of the group? Should it not be part of the group? Should Forge be part of the group or should Forge not be part of the group? So there was a lot of uncertainty at that stage and we had to get some clarity around that strategy. On the right-hand side of the slide you will see Murray & Roberts’ family portrait. This is basically what we developed during that recovery year. And that is a slide how we present to the world Murray & Roberts. It was the first time that we presented back then the concept of the operating platforms. And then we had five operating platforms within Murray & Roberts. We see Construction Products on the far right-hand side. At that stage it was 2
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